Commission response to troika report falls short

15 Sep 2014, keywords : ,

The European Commission recently responded to the European Parliament’s report on the actions and social impact of the troika (ECB, European Commission and IMF) operations with regard to euro area programme countries. The verdict? The report falls short of fully answering a number of crucial questions.

Commission response to troika report falls short

On the first count of disrespecting democratic legitimacy, the response from the European Commission states that all Memoranda of Understanding (MoU) were agreed upon by democratically-elected national governments. This says nothing of the intense political and financial pressures governments were under to sign off on these agreements, without consultation or consideration of the social impact the measures would have.

On the negative social impact, on gender and regional disparities, the Commission rightly blames the crisis. However, there is absolutely no recognition of the fact that Commission-led measures under the troika reinforced in many cases disparities and even heightened them to unacceptable levels. Some measures were appropriate, yes, but others were not. Recognition – not denial –leads to better policies and can result in better acceptance of unwelcome decisions. This is something, the Troika obviously still has to learn.

It is also disappointing that there is a degree of finger-pointing from the Commission, to finance ministers and the Council. Is this really helpful, while, in return, national governments have the tendency to blame the Troika and the crisis? This lack of accountability helps no one within political spheres and legal orders. Democracy needs someone to take responsibility for actions and their consequences. In the case of the memoranda, it can be the Commission, the ECB, the IMF, national governments or the Council – this is beside the point though. To have no one responsible means the end of democratic and accountable governance.

In the Commission’s response, the social dimension is not treated with much more respect. The Commission highlights the fiscal and economic context of the Troika operations, although underlining that it explicitly proposed that the social dimension of such reforms be duly taken into account. This looks good on paper. But words are no more than words when they ignored. If the social dimension had been duly taken into account, Europe would not be in the social crisis it is currently in with high levels of long-term unemployment, dismantled social safety nets and public services under severe strain.

There are signs that the austerity blame game is back, something which CESI warned of some time ago. The Commission writes “it is for national governments to make the choices necessary to help correct the accumulated imbalances in line with programme targets”. Where is the choice when a MoU states that hospitals must be downsized or concrete privatisations are to be implemented?

Finally, there is a very dubious response on fundamental rights. The Commission maintains that the EU Charter of Fundamental Rights does not apply to MoU’s since they are not part of EU law. Given that the signatories are Member States and EU Institutions who are bound by the Charter and by EU law, why is it not the case that fundamental rights apply?

In my legal train of thought I am not alone. In a study on Human Rights in in Times of Austerity Policy the authors see the involvement of the Commission and ECB in the troika as a commitment of EU institutions, which are bound by the Charter through Article 51 in any case. The source of the bailout money, the ESM must also comply with EU law. It must therefore follow that the EU institutions and the troika are under EU law bound to fundamental and human (EU) rights – through democracy and the rule of law.

In my train of thought, I am certainly not alone.

A signed confession was never expected – this might have be inappropriate. But any degree of recognition on the harmful path down which the troika and its operations have led certain countries, above all in terms of long term damaging social consequences, would have been welcomed.

The Commission’s response to the European Parliament’s troika report can be accessed via this link.